On September 11, 2017, HUD published a Notice designating the 2018 Qualified Census Tracts (QCTs) and Difficult Development Areas (DDAs) for the Low Income Housing Tax Credit (LIHTC) program. Qualified Census Tracts are those areas where either (1) 50% or more of the households have incomes below 60% of the area median gross income or (2) the poverty rate is at least 25%. Difficult Development Areas are those areas with high construction, land and utility costs relative to the area median gross income. Both QCTs and DDAs are eligible for an increase in basis and available tax credits of up to 30%. The Notice specifically details HUD’s methodology in determining the QCTs and DDAs through the use of fair market rents, FY2017 income limits, census counts, and other income and poverty data. An interactive map, full listing of the 2018 QCTs and DDAs, and other historical data can be accessed at https://www.huduser.gov/portal/datasets/qct.html.

These 2018 designation lists are effective for allocations of LIHTC credit after December 31, 2017, or in the case of bond transactions where tax-exempt bonds are issued and the building is placed in service after December 31, 2017. The HUD Notice also explains the effectiveness of the designations for areas not specifically on a 2018 QCT or DDA list, along with illustrative examples of the consequences of the effective date for areas that either gain or lose QCT or DDA status.

Our friends at NAHRO have alerted us that a new RAD notice will be issued tomorrow, August 23, 2017. The notice requires PHAs who already submitted a RAD letter of interest to preserve their spot on the wait list to submit a RAD application within 60 days if they want to continue in the RAD program. Guidance is also provided for setting rents for all RAD applications awarded outside of the previous 185,000 RAD cap, or for revocations or withdrawals after May 5, 2017 below that cap; rent levels for all such awards will be set at FY 2016 funding levels. Per the appropriations notice that extended the RAD cap, the outside deadline for final submission of multiphase award applications is extended to September 30, 2020.

Today, the HUD Office of Inspector General (OIG) published a bulletin indicating that it is unclear if undocumented immigrants have access to certain HUD Community Planning and Development (CPD) programs – namely the Housing for Persons with AIDS (HOPWA) and homeless assistance programs.

The bulletin explains that undocumented immigrants do not typically have access to HUD programs such as public housing or Section 8 because such programs are explicitly unavailable to such immigrants. For many HUD-assisted programs, there is a regulation that specifies which types of non-citizen families may have access to those programs and that instructs PHAs and owners on how to prorate assistance to families that include eligible and ineligible persons.

Exempt from this regulation, however, are programs that provide assistance that protects life and safety – essentially emergency services. The OIG explains that, unlike the public housing and Section 8 programs, “there does not appear to be any clear guidance” as to whether undocumented immigrants can (or cannot) access programs that are funded through HUD’s community development programs and administered through nonprofits, including HOPWA and homeless assistance. Accordingly, the OIG recommends that HUD clarify this issue.

On August 9, HUD issued to Congress its 16th report on worst case housing needs in the United States, based on 2015 data. Households with “worst case needs” are those that are very low income, do not receive government housing assistance and either pay more than 1/2 of their income for rent or live in severely inadequate conditions, or both. Findings include:

Severe housing problems are increasing despite a decent economy.

In 2015, 8.30 million households had worst case needs. This is an increase from 7.72 million in 2013. The record high for worst case needs is 8.48 million in 2011.

Worst case needs affect all types of households, whether examined by age and ethnicity, household structure, or location

within metropolitan areas or region.

The report identifies a shift from homeownership to renting as the biggest cause of the increase in worst case needs. For those of us who work with assisted housing or low-income families, its findings are unfortunately not a big surprise. However, it underscores the significant unmet needs of so many low-income families.

Increase in Housing for the Elderly to $573 million ($70.6 million above the FY2017 enacted level); and

Increase in Housing for Persons with Disabilities to $147 million for (nearly $1.0 million above the FY2017 enacted level).

The Senate Committee on Appropriations released an overall summary of the bill that can be found here. Unlike the drastic cuts seen in the House’s THUD bill, the Senate’s bill delivers increased overall funding of $60.058 billion ($3.5 billion higher than the House). This funding level represents an increase of $2.407 billion over current levels. While many speculate neither the Senate nor the House will move their respective THUD bill to the floor, the Senate’s funding levels represent a step in the right direction for those that rely on many HUD programs.

The Federal Housing Finance Agency (“FHFA”) has proposed new single-family and multifamily housing goals for Fannie Mae and Freddie Mac (collectively, the “GSEs”) for 2018-2020.

For single-family housing, the proposed goals would require that the percentage of overall qualified single-family mortgage purchases for the GSEs be as follows: the Low-Income Home Purchase Goal would be 24%; the Very Low-Income Home Purchase Goal would be 6%; the Low-Income Areas Home Purchase Subgoal would be 15%; and the Low-Income Refinance Goal would be 21%. To meet these single-family housing goals, the single-family mortgages purchased must meet or exceed the benchmark level or the market level for that year.

For multifamily housing, the proposed goals would require that the GSEs purchase mortgages for multifamily properties (multifamily is defined as properties with five or more units) as follows: the Low-Income Goal would be 315,000 units; the Very Low-Income Goal would be 60,000 units; and the Low-Income Small Multifamily Subgoal would be 10,000 units. To meet these multifamily goals, the GSEs must meet these benchmarks outlined by FHFA.

FHFA’s website provides more details on the proposed goals, the timeline for submission of comments and a link to the Federal Register notice. Comments are due September 5, 2017.

On July 12th, Ballard Spahr hosted a reception honoring Ms. Adrianne Todman and her new position as the Chief Executive Officer of the National Association of Housing and Redevelopment Officials (NAHRO). The event attracted over 50 predominantly female professionals in diverse affordable housing and community development practices across the nation.

Prior to joining NAHRO, Ms. Todman served as the Executive Director of the District of Columbia Housing Authority from 2009-2017. As the first female CEO in NAHRO’s 84 year history, Ms. Todman’s remarks to the audience highlighted her continued dedication to affordable housing, the importance of celebrating sisterhood, and the dynamic problem solving capabilities women bring to the housing industry.

Ballard Spahr wishes Ms. Todman great success in this new role, and we are excited to see all she will accomplish in the future.

On June 28, 2017, HUD issued Notice PIH 2017-10 (HA) (the “Notice”) providing guidance on the implementation of the Housing Choice Voucher (“HCV”) program funding provisions of the Consolidated Appropriations Act, 2017 (the “2017 Act”).

Under the 2017 Act, HUD received a total of $20,292,000,000 in funding for the Housing Choice Voucher program for the following budget items:

HAP Renewal Funding ($18,355,000,000)

Tenant Protection Vouchers ($110,000,000)

Administrative Fees ($1,650,000,000)

Mainstream 5 Year Program (120,000,000)

Tribal HUD-VASH Renewals ($7,000,000)

Veterans Affairs Supportive Housing ($40,000,000)

Family Unification Program ($10,000,000)

As evidenced in the Notice, the allocation methodology used to calculate housing assistance payments renewal funds, new incremental vouchers and administrative fees mostly continues the methodology established under the 2016 Consolidated Appropriations Act. We have highlighted some notable differences and new requirements below:

The 2017 Act provides funding for Tribal HUD-VASH Renewals and the Family Unification Program. Per the Notice, further guidance for both programs will be issued at a later date. Guidance for the Tribal HUD-VASH Renewals will come from the Office of Native American Programs and a NOFA will be published directing the use of the Family Unification Funding.

HUD is estimating that the $75 million dollar set-aside of HAP Renewal Funding will be necessary to prevent the termination of rental assistance for families as a result of insufficient funding of the voucher program. Applications for the other categories of set-aside funding: Unforeseen Circumstances, Portability Cost Increases, Project-Based Vouchers and HUD-VASH will not be accepted, unless there are remaining set-aside funds. The applications for shortfall funding will remain open throughout 2017, however PHA’s already within a Shortfall Protection Team with confirmed shortfalls in September, October or November of 2017 must submit an application no later than 5:00pm EST, Friday July 28, 2017 and those with confirmed shortfalls in December 2017, should submit an application no later than 5:00pm EST, Monday, January 22, 2018.

The Tenant Protection Voucher set aside has also been increased to provide funding up to $110,000,000 to assist certain at-risk households in low-vacancy areas, who pay rents above 30% AMI as a result of certain conditions. The Notice clarifies that these TPVs are considered replacement vouchers and are not subject to the same re-issuance restrictions that apply to relocation vouchers. HUD noted that further guidance on the TPV set-aside is forthcoming and that until it is issued; HUD will not consider any applications for TPV set-aside funding.

Section 6 of the Notice also provides significant detail on the process for awarding and applying for TPVs. It also explains under what circumstances tenants may be eligible for such vouchers.

With respect to Administrative Fees, the Notice clarifies that no additional request may be made after the June 23rd deadline for Blended Rate Administrative Fees and Higher Administrative Fee Rates.

We will keep you posted as additional guidance is issued for these programs.

In a new audit report, HUD’s Office of Inspector General (OIG) questioned certain costs paid by a public housing authority (PHA) for travel by the PHA’s commissioners. The OIG alleges violations of uniform cost principals at 2 CFR Part 200, state open meeting laws, as well as the PHA’s own policies. The report is a reminder to:

Remember that not all costs incurred while on official PHA business/educational travel are eligible for reimbursement with federal funds. For example, PHAs should not reimburse commissioners or staff for alcoholic beverages purchased while on official business, even if other aspects of a meal are reimbursable. Although not addressed in this audit, many entertainment and social activity costs are also unallowable, though there are exceptions, such as situations in which such costs have a programmatic purpose.

Be mindful of a PHA’s internal policies pertaining to travel and reimbursements. The OIG and others will often look to internal policies to address situations that may be otherwise allowable under federal requirements.

Pay attention to potential conflict-of-interest situations. A PHA’s ACCs with HUD as well as procurement regulations and some state laws prohibit certain types of financial arrangements involving a PHA and its staff or commissioners. The ACCs in particular will prohibit these arrangements during and for one year after a commissioner’s tenure.

The U.S. Department of Housing and Urban Development (“HUD”) released the Fiscal Year 2017 Housing Trust Fund (HTF) allocation amounts on June 20, 2017, setting forth the amounts awarded to each state or territory under the HTF. The total HTF allocation for Fiscal Year 2017 is $219,168,373.94, including $12,702,747.00 in unallocated funds from Fiscal Year 2016. The formula HUD uses to allocate funds is enumerated at 24 CFR Part 93; and based foremost on the ratio of the shortage of standard rental units both affordable and available to extremely low-income renter households in the state or territory to the aggregate shortage of standard rental units both affordable and available to extremely low-income renter households in the United States, with each recipient granted a minimum annual award of $3,000,000.00.

Stay Connected

About the Housing Group

Ballard Spahr's housing practice
is nationally recognized for its innovative and practical approaches in the development and financing of housing and community development projects nationwide. Our experience includes the representation of more than 75 housing authorities, the closing of hundreds of bond transactions as bond and underwriter's counsel, and involvement in thousands of tax-credit transactions. We routinely represent borrowers and more than a dozen lenders under all of the multifamily programs of Freddie Mac, Fannie Mae, and HUD.